Ambitious plans for textile growth

By KEVIN TAYLOR

It may come as a surprise for many to learn that export growth in the textiles, clothing, footwear and carpet sector has averaged 8.3 per cent a year for the past decade.

Decimated in the 1980s as the Government cut tariffs on imports in economic restructuring, the so-called TCFC sector has been quietly in turnaround mode.

Now, noisy progress is being made towards what sector leaders hope is a brighter future.

Last year the industry went to the Government for help with a development strategy.

Industry and Regional Development Minister Jim Anderton and former Commerce Minister Paul Swain got Industry NZ on the job.

Just over a year later, an ambitious draft strategy has been released. It proposes that the sector be exporting $1 billion of goods a year by 2008 - up from $390 million at the end of last year.

The strategy seeks an upgraded image from a "sunset" sector, in order to attract skilled workers, managers and investors.

Norsewear chief executive Paul Spicer says that reaching the $1 billion target would make the sector one of the most important, if not the most important, manufacturing export industry in New Zealand.

He believes the target is realistic and achievable.

Spicer, convener of one of the working groups developing the strategy, says the document was not designed to push all businesses to export. What it did mean was that the non-exporters should supply those that do.

The strategy also advocates an industry development organisation.

The body would get firms to cooperate so they could target new customers in new markets, build distribution capability, improve management practices and training, and develop an industry ethical behaviour code.

Last week Spicer chaired some consultation meetings around the country over the strategy.

He was amazed at the pledges that came from the industry for the new body - just out of the meetings they totalled $50,000.

The Government will also seed-fund the body to a maximum of $100,000.

The TCFC industries are still significant employers, despite the decimation that came from the tariff cuts. About 2000 firms employ 17,600 people.

Spicer says 416 of the firms employ some 16,000 staff - meaning the other 1500 are small companies.

Industry NZ sector specialist Evan Morch emphasises that the strategy and all its lofty targets have been set by the sector itself.

Industry NZ has been involved only in facilitating the process, he says, and the industry has driven it forward. He admits there have been sceptics over the Government's involvement.

But Morch says there is already significant sector support for the goals.

Once it is endorsed, the strategy will help focus the decision-making of Industry NZ regional managers when sector firms seeks assistance in, for example, regional or cluster initiatives.

Another strategy convener, Robert Reid of the Council of Trade Unions, says that for 15 years successive Governments turned their backs on the sector and left the workforce on the scrapheap.

Employment has halved to just under 20,000 over that time.

But now the strategy, which has full union backing, could turn things around. Unions also support the call for an industry body and will help pay for it.

The lack of training for workers and management was also identified as a large obstruction to the sector's growth.

The strategy pushes the idea that sector businesses learn to work together - such as by sharing overheads. Clusters are promoted.

Spicer has already formed an export cluster with two other companies, simply through being introduced to others at the strategy meetings.

Glenn Keen, president of the now-defunct Apparel and Textile Federation, welcomes the initiative. The federation has gone into recess as the new industry development organisation looms.

"We have had a fair bit of input into the strategy," he says. "We have not had this degree of consultation in the past."

The strategy has lofty goals, and the question is how to make it work, he says.

"If they follow through on the recommendations, we have got a chance.

"We are succeeding without that help at the moment. We are getting export growth and we aren't a sunset industry anymore."

He says the sector now has few of the large Lane Walker Rudkin-sized industries left.

"There's a whole splurge of new businesses that are very small and quick to market; that is where the industry has gone."

One thing the strategy does not do is ask for higher import tariffs, which are currently set at 19 per cent for most apparel and 15 per cent for textile imports.

They have been frozen since the Labour-Alliance Government took power in 1999, and are due to stay in place until 2005.

Keen says the industry generally wants them retained at the level of New Zealand's major trading partners.

"Australia, Japan and the US especially have very high tariffs for clothing. Why should we open our doors when they are not opening up theirs?"

Spicer agrees, saying the general view is that there should be a level playing field.

The Government has given no indication of what it will do once the tariff freeze ends, despite backing the strategy.

He says the industry may not be able to stop the tariffs going, but at least it now has a chance to plead its case at the highest levels of Government.

Keen says that combined, the TCFC industries are still of reasonable size, despite the impression it is a sunset sector.

"You can talk about all the wine and shipbuilding and so on, but we are a hell of a lot bigger than all those - and we shouldn't be given away."

* In forum tomorrow: Jim Anderton and Paul Spicer discuss the sector's strategy and future.